First Quarter 2019 Industrial Market Report. Chicago Industrial Market

Quick Stats 4.3% The unemployment rate remains strong in the Metro at 4.3%, a slight increase of 30 basis points from Q4 2018. 13,000 jobs 13,000 jobs have been added to the manufacturing and construction sectors since February of 2018. 1,000,000 sf The largest spec building is currently a 1,000,000 sf building being constructed in Kenosha by Darwin Realty & Development. 57% The construction pipeline is up 57% year-over-year. Busiest O Hare International was named the busiest airport in the United States for 2018. Industrial Market The industrial Market, comprised of over 1.1 billion square feet (bsf ), continued to observe a declining vacancy rate and an abundance of construction activity across most major submarkets during the first quarter. Most of the leasing activity was seen within I-80 Corridor, I-55 Corridor and the O Hare submarkets representing a total of 3.1 msf and 43% of all leasing velocity. Construction volume remained high across many submarkets, with 59 buildings totaling 19.3 million square feet under construction, much of it speculative. While this figure remains relatively steady from last quarter, it marks the 20th consecutive quarter during which at least 35 buildings totaling more than 10 million square feet have been under construction. This indicates an unusually long cycle for high levels of demand and speculative construction. Economic Overview The economic landscape continued to improve throughout the first quarter of 2019. As of February, the unemployment rate dropped 90 basis points (bps) year-overyear to 4.3%. This is slightly elevated when compared to the national average of 4.1%. Manufacturing and construction sectors have added 13,000 jobs since February of 2018 contributing to a total of 587,100 jobs between the two sectors, representing a combined 2.2% year-over-year growth. O Hare International Airport was recently recognized as the nation s busiest in terms of total flights for the first time since 2014. O Hare transported more than 83.4 million passengers in 2018, representing a 4.5% increase year-over-year, according to the Department of Aviation (CDA). The airport s importance to the industrial sector is clear. On average in 2018, there were 60 cargo flights per day departing from or arriving at O Hare. International flights carried an average of 3,876 tons of cargo per day, with domestic flights carrying an average of 1,152 tons of cargo per day. The City of made history on April 2, 2019 electing Lori Lightfoot as the first African-American female mayor. The changing political landscape has created a sense of uncertainty that will unfold in the second half of 2019. Page 1

First Quarter 2019 Industrial Market Report RACINE WALWORTH ROCK Trends to Watch MILWAUKEE WAUKESHA JEFFERSON 2 KENOSHA WISCONSIN ILLINOIS 17 Multi-story warehouses continue to be the talk of the industrial sector, as developers look for creative ways to fill demand for last mile and other warehousing space in dense, urban population bases. While there are several proposals in the market in New York City, for example, the prospects of multi-story warehouses in appear to be years away. Given available land within a 30-minute truck drive from s urban core, there is little incentive for developers to pay the added cost of buying infill sites and building vertically. 1 10 MC HENRY BOONE LAKE 9 OGLE KANE 12 DEKALB LEE 4 6 7 11 KENDALL 5 Midway Airport COOK 14 LA SALLE 16 13 WILL 15 GRUNDY 19 LAKE KANKAKEE NEWTON LIVINGSTON Industrial Submarkets by the Numbers Map Key DUPAGE 18 Sale-leasebacks will continue to drive a portion of investment activity in the industrial sector, as they provide stable cash flow for investors and opportunities for businesses to monetize their real estate assets. Tax law changes have prompted many corporations to look closely at how sale leasebacks might positively impact their balance sheets. One notable sale leaseback this quarter was 10411 80th Ave in Pleasant Prairie, WI, which sold for $16 million or $81.88 psf. The 195,415-sf property was delivered in January of 2019. Doheny s, a swimming pool supply business, sold the building to STAG Industrial and is leasing the site on a long-term basis. 3 8 ILLINOIS INDIANA WINNEBAGO Submarket Inventory (sf) Vacancy (sf) Vacancy (%) Net Absorption Leasing Activity (sf) Under Construction Avg Asking Rent Overall Market 1,116,293,354 66,131,436 5.92% 1,651,752 7,218,291 19,320,347 $5.38 1 Lake County 72,142,819 3,825,797 5.30% -332,452 294,165 1,403,943 $5.84 2 Southern Wisconsin 32,360,640 2,567,790 7.90% -35,528 301,079 3,860,640 $4.62 3 North Cook 42,349,601 2,397,182 5.70% 18,041 49,401 150,000 $6.59 4 O'Hare 114,573,731 7,261,549 6.30% 420,482 934,640 551,381 $5.06 5 South Industrial 103,371,863 4,415,365 4.30% 201,943 488,536 1,284,436 $6.21 6 North Industrial 54,962,970 3,274,497 6.00% 191,232 237,396 $9.37 7 West Cook 57,487,927 1,887,048 3.30% 46,781 444,580 575,935 $5.15 8 I-90 East Corridor 20,414,645 604,925 3.00% 231,228 42,156 626,320 $4.57 9 I-90 West/Elgin Corridor 33,113,293 1,316,955 4.00% -7,729 60,565 118,457 $5.23 10 McHenry County 26,540,517 2,103,195 7.90% -3,064 15,108 $4.85 11 East DuPage 28,954,749 954,037 3.30% -83,485 246,496 $5.82 12 US-64 Corridor 78,118,552 3,053,589 3.90% 467,068 581,905 1,446,910 $3.75 13 South Cook 77,485,532 2,907,034 3.80% -215,003 459,868 219,267 $4.54 14 I-55 Corridor 96,459,257 10,648,435 11.00% -74,884 1,071,901 3,496,611 $5.74 15 I-57 Corridor 21,193,709 424,855 2.00% -68,300 301,048 $6.50 16 I-80 Corridor 93,609,003 10,191,896 10.90% 1,183,737 1,114,132 4,556,226 $4.94 17 I-39 Corridor 52,690,644 3,183,310 6.00% -403,330 215,900 183,000 $3.37 18 I-88 Corridor 62,951,081 3,861,202 6.10% -15,629 318,165 847,221 $5.63 19 Northwestern Indiana 47,530,821 1,252,775 2.60% 130,644 41,250 $4.50 Page 2

Vacancy & Availability The vacancy rate dropped 20 basis points (bps) since last quarter and is currently recorded at 5.9%. The submarkets that observed the largest gains in occupancy included the I-80 corridor, South and I-90 East Corridor dropping 110 bps to 10.9%, 90 bps to 4.3% and 70 bps to 3%, respectively. The markets with the largest increases in vacancy percentage were Southern Wisconsin, I-88 corridor, and Lake County. Southern Wisconsin vacancy increased 140 bps which can be partially attributed to the flow of speculative construction that is continuing in that market. This quarter alone more than 440,000 sf of speculative properties were delivered. Vacancy in the I-88 submarket was recorded at 6.1%, an increase of 80 basis points. This increase in vacancy can be attributed to the completion of 638,575 sf of speculative space in the first quarter. With Lake County observing slightly weaker leasing activity than last quarter, vacancy increased 50 bps to a still very strong 5.3%. Absorption & Demand Leasing activity throughout the market witnessed a slight decline when compared to the previous quarter down 13% to 7.2 msf. There were a total of 242 leases signed with an average size of 29,100 sf. The submarkets with the highest leasing activity were the I-80, I -55 Corridor and the O Hare submarkets, which accounted for 3.1 msf and 43% of all leasing activity within the quarter. Demand across the market remains strong with net absorption totaling 1.6 msf. Pharmaceutical company Fresenius Kabi penned the largest lease of the quarter in Pleasant Prairie, Wisconsin. The 590,000- sf lease helped offset the impact of new construction in the submarket to contribute to a relatively neutral -35,000-squarefoot net absorption. Average Asking Rental Rate ($) $4.95 $4.90 $4.85 $4.80 $4.75 $4.70 $4.65 $4.60 $4.55 2018 Q2 2018 Q3 2018 Q4 2019 Q1 Vacancy Rate (%) 6.5 6.4 6.3 6.2 6.1 6.0 5.9 5.8 5.7 2016 Q1 2017 Q1 2018 Q1 2019 Q1 Net Absorption (MSF) 8 7 6 5 4 3 2 1 0 2018 Q2 2018 Q3 2018 Q4 2019 Q1 Leasing Activity 43% I-80, I-55, & O Hare Submarkets accounted for 45% of all leasing activity signing 3.12 msf in Q1, 2019 MSF LEASED 18 16 14 12 10 8 6 4 2 0 450 400 350 300 250 200 150 100 50 0 2016 Q1 # OF DEALS 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 Leased SF Number of Deals Page 3

Construction The market continues to witness tremendous growth in new product being delivered. There is a total of 19.3 msf currently under construction with a dominant presence in I-80, Southern Wisconsin and the I-55 corridor. These three submarkets currently have 11.9 msf under construction, with I-80 corridor submarket totaling 4.5 msf alone. The largest building under construction is 77th Ave in Kenosha, WI. The development is a 1 msf speculative project underway in the Southern Wisconsin Submarket. The building is being developed by Darwin Realty and Development Corporation. The Southern Wisconsin Submarket currently has 3.8 msf, almost 20% of total square footage under construction. The most active developer is currently CT Realty Investors. The firm is currently building over 1.3 msf split between two buildings. Both buildings are being constructed on a speculative basis and both are in the I-55 Corridor Submarket.. The 512,713 sf property, built in 1950 and renovated in 1992, was sold by CenterPoint Properties to EMCO Chemical Distributors for $16,650,000 or $32.47 psf. Many other buildings sold during the quarter were newer, which was reflected in the average sale price for the quarter of $63 psf. The total size volume accounted for 13.3 msf and was 84.8% leased at the time of sale. Other notable sales included: Alpha Industrial Properties purchasing a new 81,212-sf building at 845 N. Larch in Elmhurst from Venture One Real Estate for $12.1 million, or $149 psf, showing the value of modern buildings near transportation hubs. Canadian developer Onni Group purchased a 152,914-sf former Greyhound bus maintenance facility at 901-1101 N Halsted St., for $248.50 psf. This site may transition from an industrial property to another use, such as residential. Investment There were 80 investment sale transactions during the first quarter of 2019, with a transactional volume of $661.5 million. Following several years of strong activity, this represents a significant dip of 46% in volume when compared to Q1 2018. The top investment sale transaction during the first quarter of 2019 was the sale of 3601 N Skokie Highway in North The top investment transaction of Q1 2018 was the purchase of 3601 N Skokie Highway in North. The 512,713 sf property sold for $16,650,000 or $32.47 psf. Notable Leases Tenant Address Submarket Size (SF) Type Fresenius Kabi 120th Avenue & 122nd Street, Pleasant Prairie, WI Southern WI 590,525 New Bed Bath & Beyond 850 Veterans Parkway, Bolingbrook, IL I-55 Corridor 361,176 New ODW Logistics 5300 Proviso Drive, Melrose Park, IL West Cook 343,410 Renewal First Logistics 2075 W 43rd Street,, IL South 331,059 New Madden Communications 8725 31st Street, Somers, WI Southern WI 301,079 New Notable Sales Comps Address Size Buyer Seller Sale Price Price PSF 3601 N Skokie Hwy, North, IL 512,713 EMCO Chemical Dist Inc Centerpoint Properties $16,650,000 $32.47 10411 80th Ave, Pleasant Prairie, WI 195,415 STAG Industrial Inc Doheny's $16,000,000 $81.88 701 Devon Ave, Elk Grove Village, IL 218,000 ML Realty Partners LLC Arrow Plastic Mfg $14,925,000 $68.46 1998 Melissa Ln, Aurora, IL 172,654 First Industrial Realty Trust The Missner Group Co $12,258,500 $71.00 845 N Larch Ave, Elmhurst, IL 81,212 Alpha Industrial Properties Venture One Real Estate $12,101,000 $149.01 Page 4

t CHICAGOLAND Construction & Deliveries Notable Q1Construction [275,000+ SF Projects] Market Building NRA Type Delivery Date Developer % Leased Southern Wisconsin 77th Ave, Kenosha WI 1,000,000 Speculative Q4-2019 Darwin 0% South 3501 S Pulaski Rd, IL 999,900 Speculative Q1-2020 Hilco Real Estate 0% I-80 Corridor 25101 S Ridgeland Ave, Monee IL 879,040 Speculative Q4-2019 Location Finders International 0% I-80 Corridor 3901 Brandon Rd, Joliet IL 826,755 Speculative Q2-2019 CenterPoint Properties 0% Southern Wisconsin 12508 38th St, Kenosha WI 800,000 BTS Q2-2019 Uline 100% US-64 Corridor 805 Discovery Dr, West IL 782,000 BTS Q2-2019 Pritzker Realty Group LLC 100% I-80 Corridor 21228 Frontage Rd, Shorewood, IL 757,880 Speculative Q2-2019 HSA Commercial Real Estate 0% I-55 Corridor 2 Prologis Park 355, Lockport IL 750,314 BTS Q4-2019 Prologis 100% Southern Wisconsin 4306 120th Ave, Kenosha IL 748,500 Speculative Q3-2019 Logistics Property Co LLC 0% I-55 Corridor 901-1001 W Bluff Rd, Romeoville IL 684,320 Speculative Q2-2019 CT Realty Investors 0% I-55 Corridor 901-1001 W Bluff Rd, Romeoville IL 657,540 Speculative Q2-2019 CT Realty Investors 0% I-55 Corridor SW143rd St & Gougar Rd, Lockport, IL 545,010 Speculative Q4-2019 Krusinski Construction Co 0% Lake County 1350 Bridge Dr, Waukegan, IL 544,429 Speculative Q2-2019 Bridge Development Partners 73% I-55 Corridor 20100 Renwick Rd, Romeoville, IL 543,780 Speculative Q2-2019 Duke Realty Corporation 0% Southern Wisconsin STH 142 & 148th Ave, Kenosha, WI 524,399 Speculative Q2-2019 Zilber Property Group 1% I-88 Corridor 2350 Frieder Ln, Aurora, IL 503,244 Speculative Q3-2019 Sterling Bay 31% Southern Wisconsin I-94, Kenosha, WI 500,000 BTS Q3-2021 HAIRBO of America 100% I-80 Corridor 1200 Cherry Hill Rd, Joliet, IL 424,000 Speculative Q2-2019 Northern Builders Inc 0% US-64 Corridor 2513 Enterprise Cir, West, IL 399,360 BTS Q2-2020 CenterPoint Properties 100% West Cook 1400 S Laramie Ave, Cicero, IL 343,090 Speculative Q3-2019 Bridge Development Partners 0% I-90 East Corridor 703-709 W Algonquin Rd, Arlington Hts, IL 331,175 Speculative Q2-2019 Hamilton Partners 18% I-55 Corridor 1 Prologis Park 355, Lockport, IL 315,647 Speculative Q3-2019 Prologis 0% Southern Wisconsin 4306 120th Ave, Kenosha WI 287,741 Speculative Q3-2019 Logistics Property Co LLC 0% TOTAL 14,148,124 Page 5

t CHICAGOLAND Construction & Deliveries Select Notable Q1Deliveries Market Building NRA Type Developer Major Tenants % Leased O'Hare 11601 Copenhagen Ct, Franklin Park, IL 400,370 Speculative Panattoni Development Company N/A 0% I-90 East Corridor 703-709 W Algonquin Rd, Arlington Hts, IL 331,175 BTS Hamilton Parters Taiki USA Inc 37% US-64 Corridor 1370 Brewster Creek Blvd, Bartlett, IL 300,000 BTS Rana USA, Inc Rana Meal Solutions 100% I-88 Corridor 3800 Finley Rd, Downers Grove, IL 291,345 Speculative Bridge Development Partners N/A 0% O'Hare 10701 Franklin Ave, Franklin Park, IL 277,762 Speculative Bridge Development Partners N/A 0% Southern WI 5312 104th Ave, Kenosha, WI 250,048 Speculative Zilber Property Group N/A 0% I-80 Corridor 2301 W Haven Ave, New Lenox, IL 202,582 BTS Northern Builders Inc Automann 100% Southern WI 10550 86th Ave, Pleasant Prairie, IL 196,300 Speculative Wangard Partners Inc N/A 0% O'Hare 220 N York Rd, Bensenville, IL 190,226 Speculative EverWest Real Estate Investors LLC N/A 0% I-88 Corridor 3600 Lacey Rd, Downers Grove, IL 174,576 Speculative Bridge Development Partners N/A 0% I-88 Corridor 1998 Melissa Ln, Aurora, IL 172,654 Speculative First Industrial Realty Trust Inc N/A 0% O'Hare 200 Innovation Dr, Elk Grove Village, IL 165,128 BTS Brennan Investment Group N/A 0% O'Hare 150 Innovation Dr, Elk Grove Village, IL 151,693 BTS Brennan Investment Group N/A 0% US-64 Corridor 1100 N Raddant Rd, Batavia, IL 102,142 Speculative Midwest Industrial Funds N/A 0% Page 6

Contiguous Blocks [Available Class A Space 250,000+ SF] Building Address Submarket Name City State Rentable Building Area Max Building Contiguous Space Percent Leased Owner Name 1010 Taylor Rd I-55 Corridor Romeoville IL 824,753 824,753 Existing Molto Properties LLC 1101 W Airport Rd I-55 Corridor Romeoville IL 787,499 787,499 Existing Prologis Inc 901-1001 W Bluff Rd I-55 Corridor Romeoville IL 684,320 684,320 Under Construction CT Realty Investors 175 Southcreek Pky I-55 Corridor Romeoville IL 676,026 676,026 Existing Panattoni Development Co 901-1001 W Bluff Rd I-55 Corridor Romeoville IL 657,540 657,540 Under Construction CT Realty Investors 160 S Southcreek Pky I-55 Corridor Romeoville IL 648,960 648,960 Existing LaSalle Investment Management Inc SW 143rd St & Gougar Rd I-55 Corridor Lockport IL 545,010 545,010 Under Construction Krusinski Construction Co 20100 Renwick Rd I-55 Corridor Romeoville IL 543,780 543,780 Under Construction Duke Realty Corp 145 Pinnacle Dr I-55 Corridor Romeoville IL 469,920 469,920 Existing Prologis Inc 500 S Pinnacle Dr I-55 Corridor Romeoville IL 407,385 407,385 Existing Panattoni Development Co 3300 Channahon Rd I-80 Corridor Joliet IL 1,220,140 1,220,140 Exixting AEW Capital Management 1023 E Laraway Rd I-80 Corridor Joliet IL 1,026,000 1,026,000 Existing Core5 Industrial Partners 24101 S Frontage Rd I-80 Corridor Channahon IL 1,000,110 1,000,110 Existing USAA Real Estate Company 25101 S Ridgeland Ave I-80 Corridor Monee IL 879,040 879,040 Under Construction Bailly Ridge Owner LLC 3901 Brandon Rd I-80 Corridor Joliet IL 826,755 826,755 Under Construction CenterPoint Properties 30260 Graaskamp Blvd I-80 Corridor Wilmington IL 810,900 810,900 Existing Ridge Property Trust 21228 Frontage Rd I-80 Corridor Shorewood IL 757,880 757,880 Under Construction HSA Commercial Real Estate 23700 W Bluff Rd I-80 Corridor Channahon IL 749,554 749,554 Existing Oxford Properties Group 2700 Ellis Rd I-80 Corridor Joliet IL 754,923 689,524 Existing CBRE Global Investors Ltd 2695 Plainfield Rd I-80 Corridor Joliet IL 671,040 671,040 Existing Angelo, Gordon & C 3901 Rock Creek Blvd I-80 Corridor Joliet IL 464,400 464,400 Existing CBRE Global Investors Ltd 1695-1701 Crossroads Dr I-80 Corridor Joliet IL 459,469 459,469 Existing TA Realty 2805 Duke Pky I-88 Corridor Aurora IL 551,200 549,588 Existing Duke Realty Corporation 2350 Frieder Ln I-88 Corridor Aurora IL 503,244 501,696 Under Construction Butterfield Lot 401 Owner LLC 2001 N Division St McHenry County Harvard IL 619,590 619,590 Existing Edward Gong 11601 Copenhagen Ct O'Hare Franklin Park IL 400,370 400,370 Existing Panattoni Development Co 3501 S Pulaski Rd South IL 999,900 999,900 Under Construction Hilco Real Estate 21700 Mark Collins Dr South Cook Sauk Village IL 776,515 776,515 Existing WSI 77th Avenue Southern Wisconsin Kenosha WI 1,000,000 1,000,000 Under Construction Cendrillon LLC STH 142 & 148th Ave Southern Wisconsin Kenosha WI 524,399 524,339 Under Construction Zilber Property Group 11290 80th Ave Southern Wisconsin Pleasant Prairie WI 525,688 525,688 Existing UBS Real Estate Investments Inc Page 7

O'Hare International Airport O'Hare Expansion Plan Recently, the City of announced that Studio ORD, led by Jeanne Gang, was selected as the architectural firm that will oversee the design and development of O Hare International Airport s Terminal 2 rehabilitation. Soon to be renamed the Global Terminal, the Terminal 2 project is estimated at $8.5 billion and is expected to be completed by 2028. The Global Terminal will result in three new concourses, approximately 25% more gates, and a 50% increase in terminal area. The Global Terminal project will come in addition to the infrastructure upgrades currently underway at O Hare. Since 2008, the airport has completed three runways and one runway extension. Currently under construction are one new runway and one runway extension, which are expected to be completed by 2021. Additionally, the airport recently completed a state-of-the-art rental car facility as well as an extension of the airport tram line. The continuing upgrades to both passenger and cargo facilities should keep O Hare competitive as the busiest airport for years to come. 900,000 Flight operations, over 22,000 were cargo flights International flight operations are up 47% from 2017. Only U.S. gateway where six of the seven major North American railroads can interchange with air cargo. is one of world s top five intermodal container handlers and #1 in Western Hemisphere Leading gateway for air cargo between the U.S. and China by both value and tonnage. O'Hare is responsible for moving two-thirds of the international cargo in the Midwest. Source: Department of Aviation & FAA Page 8

Contact Information Kathleen Cavanaugh Research Manager 312.940.6266 kathleen.cavanaugh@ George Susral III Research Analyst 312.796.0379 george.susral@ Contact one of our local offices: One South Wacker Drive, Ste. 3000, IL 60606 312.957.7600 Rosemont 9550 W. Higgins Road, Ste. 900 Rosemont, IL 60018 847.849.1900. Properties 2019 Avison Young -, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.